Marketing and promotion services for an overseas client-whether "intermediary service" u/r 9(c)-decided as export, refund allowed.

The dominant issue was whether the appellant's promotion and marketing activities for an overseas recipient constituted "intermediary service" under rule 9(c) of the Place of Provision of Services Rules, 2012, thereby fixing the place of provision in India and disentitling export benefits. The Tribunal held that the agreement showed the appellant provided specified marketing/promotion services on its own account, created no principal-agent relationship, and did not arrange or facilitate the main supply between the overseas recipient and third parties; hence it was not an intermediary and rule 3 applied, making the place of provision the recipient's location outside India. Consequently, the services qualified as export, and refund of unutilised Cenvat credit under rule 5 could not be denied; the appeal was allowed.

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Issues Involved:
1. Whether the services provided by the appellant prior to 01.07.2012 can be termed as export of services.
2. Whether the appellant provided intermediary services post 01.07.2012.
3. Whether the refund claims filed by the appellant under rule 5 of the CENVAT Credit Rules 2004 were rightly rejected.

Detailed Analysis:

1. Whether the services provided by the appellant prior to 01.07.2012 can be termed as export of services:

The adjudicating authority observed that Business Auxiliary Service (BAS) is excluded from the ambit of service under rule 3(1) of the 2005 Export Rules. However, it was found that BAS, taxable under section 65(105)(zzb) of the Finance Act, is not excluded. Rule 3(1) of the 2005 Export Rules treats all services under section 65(105) of the Finance Act as export of service, except those expressly excluded. Therefore, the appellant is entitled to refund for the period prior to 01.07.2012.

2. Whether the appellant provided intermediary services post 01.07.2012:

The concept of "intermediary" was introduced in the 2012 Rules and defined in rule 2(f) as a broker, agent, or any person who arranges or facilitates a provision of a service or supply of goods between two or more persons but does not include a person who provides the main service or supplies the goods on his account. The Commissioner (Appeals) concluded that the appellant acted as an intermediary, facilitating services between Blackberry Singapore and its customers without material alteration. However, the agreement between the appellant and Blackberry Singapore indicates that the appellant provided marketing, administrative, and support services as an independent contractor, not as an agent or intermediary. The appellant was not involved in facilitating supply between Blackberry Singapore and its customers, and the consideration was on a Cost-Plus basis, independent of sales made by Blackberry Singapore to its customers. Therefore, the appellant did not qualify as an intermediary.

3. Whether the refund claims filed by the appellant under rule 5 of the CENVAT Credit Rules 2004 were rightly rejected:

The refund claims were rejected by the Assistant Commissioner on the ground that the appellant provided intermediary services, making the place of provision of services the location of the service provider (India), thus not fulfilling the condition set out in rule 6A of the Service Tax Rules 1994. The Commissioner (Appeals) upheld this decision. However, the analysis of the agreement and relevant rules indicates that the appellant provided services to Blackberry Singapore, located outside India, and received payment in convertible foreign exchange. Therefore, the services qualify as export of services under rule 6A of the 1994 Rules. The appellant is entitled to the refund claimed under rule 5 of the CENVAT Credit Rules 2004.

Conclusion:

The order dated 18.08.2021 passed by the Commissioner (Appeals) is set aside, and the appeal is allowed, recognizing the services provided by the appellant as export of services and entitling them to the refund claimed.

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